QUESTION: Concerning Reg Z and the TIL form, when we find that our bank has improperly disclosed the APR and Finance charge on a mortgage loan, how do we go about calculating the reimbursement? Does this always automatically trigger a reimbursement? I have tried to find info on it in the regulation but have not found anything to help.

ANSWER: The Truth in Lending Act has required the bank supervisors to order reimbursement for all cases discovered since 1980 where a pattern and practice of understated APRs or Finance Charges can be identified. Creditors are also encouraged to make voluntary reimbursements when pattern and practice are not a factor, and the consumer is always free to sue the bank under Section 130(a) of the TILA.

In addition to Regulation Z and its Commentary, you must review the interagency guidelines on reimbursement. This document was recently updated and is available online.

Reimbursement can be an expensive remedy and the existence of these serious TIL violations can damage your bank's compliance rating. Considering these risks, you may wish to engage an expert advisor to guide you through the complicated steps necessary to verify the existence of a reimbursable error, determine the applicability of the reimbursement policy guide, perform appropriate calculations, apply legal exceptions and tolerances, and help you beef up software and procedures to prevent recurrence.

Editor's Note: APR Systems, Inc. offers a handheld calculator with 80-page manual that verifies APRs and calculates reimbursement amounts. The OCC also offers a software product that performs many of the same calculations.

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